Does it pay off to be really good?
Neu-Ulm University of Applied Sciences
November 6, 2023
After this session, you should have a solid understanding of
A single individual can usually only commit small sins; a large firm can commit grandiose ones. Claes Gustafsson in Mintzberg (2014)
Following concerns make the idea of an ethical strategy relevant:
Ethics also apply to organizations as they may cause long-term damage, as they are difficult to turn, and as the question of doing right is not easy.
What is ethics?
Ethics is the branch of philosophy that involves systematizing, defending, and recommending concepts of right and wrong conduct. Wikipedia contributors (2023)
The term comes from the Greek word ‘ethos,’ which means character. Ethical theories reflect on what is morally good and how individuals ought to behave, offering guidance for making moral decisions.
Is there a moral (or social) responsibility for firms?
If so, what is the extend and type of the responsibiliy?
Firms do not function in a vacuum. They function in the context of a (wider) social environment, which imposes on them certain moral demands and responsibilities Mintzberg (2014)
Business ethics refers to the principles of right and wrong conduct within organizations that guide decision making and behavior David and David (2016).
The right conduct includes those lines of actions that are desirable in terms of the objectives and (moral) values of our society (Bowen and Johnson 1953).
Morality is an aspect of culture—different cultures have different moral systems. Moral values also change over time.
Two social and cultural changes are to be expected that could lead to ethical conflicts (of strategic concern for corporations) in the future (Mintzberg 2014):
The effect of rapid technological development & cultural effects of environmental changes
What are ethical conflicts in business?
From a strategic point of view, what should companies do to counter these?
Develop ethics sensitivity, educating employees, expressing moral convictions clearly and consistently, and predicting and preparing for the future.
The firm’s consideration of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm. Davis (1973)
The economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time. Carroll (1979)
The policies and practices of corporations that reflect business responsibility for some of the wider societal good. Yet the precise manifestation and direction of the responsibility lie at the discretion of the corporation. Matten and Moon (2008)
Definitions in academia and practice capture the following features (Moon 2014):
Corporate responsibility towards society and responsibility for society
as well as responsible corporate behavior.
Does it pay to be socially responsible?
Take 20 minutes, discuss your insights from reading Barnett and Salomon (2012), find reasons for why CSR might impact financial performance positively, give real-life examples and derive activities or characteristics of socially responsible companies.
Prepare to present your findings in a 5 to 10 minutes presentation.
Some principles that characterize the ethics of corporate strategies:
The following questions are designed to review and consolidate what you have learned and are a good starting point for preparing for the exam.
Read Lorenz and Buchwald (2023) and make notes on following questions: